It took less
work for a pig to woo a frog than it's taking to sell the Muppets.

Dean Valentine,
former president of Walt Disney Television, Walt Disney Television
Animation, and UPN chief executive wants to bring the Muppets back
to the forefront.

Dean Valentine,
an entertainment industry veteran who is hoping to buy Jim Henson Co.,
has run into trouble financing his offer,
sources said, but the German media rights group EM.TV, which owns the
Muppet maker, and Valentine's partner, both pledged support for the deal
over the weekend.

Talks have
dragged out longer than expected for the company that created Miss Piggy
and her green beau, Kermit the Frog. EM.TV, a former German stock market
darling trying to recover from a share meltdown, bought Henson almost
three years ago.

"We
have no reason to doubt that Dean Valentine will be able to finance his
offer," EM.TV Chief Financial Officer Andreas Pres told Reuters in
an interview.

Valentine's
financial backer, Thomas Unterman, said his buyout firm, Rustic Canyon
Group, was still interested in the deal, as well. "I'm still very
supportive of Dean's efforts to pursue this transaction," he said
in an interview.

Other people
close to the situation said, however, that Valentine, who is the former
chief executive of Viacon Inc.'s United Paramount Network, his adviser
Europlay Capital Advisors, and Unterman are at odds on terms for the bid.
Sources said Valentine has offered about $30 million for a 49.9 percent
stake in the company.

Munich-based
EM.TV already has pushed back its target for closing
the transaction to the end of February from its initial forecast of
January. One source close to the negotiations said internal turmoil at
EM.TV, which is angling to stave off a liquidity crisis, was slowing talks.

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FUNDING

Valentine
and Europlay also are trolling Hollywood for more money, sources said.
Some suggested it was an indication that the deal with Unterman was on
the rocks, while others said Valentine simply may be seeking more money
to buy a bigger stake of Henson than he originally proposed.

Valentine
declined to comment at all, and Unterman declined to discuss any specifics
of the financing.

Other people
familiar with Henson blamed inconsistencies with the company's character
copyrights and problems with the quality of its distribution deals for
the auction woes. EM.TV has been seeking a buyer for more than a year.

EM.TV was
once a high-flying stock on Germany's now defunct Neuer Markt, but has
been fighting to recover from near bankruptcy after massive debt forced
its founder to leave almost two years ago. It paid
$680 million in February 2000 for Henson and has sold off chunks of
the business since then.

If Valentine
were to drop out because of financing problems, it would pave the way
for one of the other suitors hovering around the deal.

Some have
walked away or backpedaled, however, after getting a closer look at the
state of the Muppets business, which has deteriorated over the past decade,
since the company's patriarch, Jim Henson, died suddenly, sources said.

Walt Disney
Co., which had been contemplating a $135
million bid for the entire business, has withheld its offer, sources
said. Entertainment Rights Plc., a British-based company that licenses
the rights to children's characters, also has dropped out of the hunt,
they added.

Disney, which
had been close to buying Henson more than a decade ago, declined to comment,
and Entertainment Rights could not be reached.

Classic
Media, which holds the rights to various children's characters including
Casper the Friendly Ghost, and billionaire
Haim Saban, who made a fortune with children's television figures
such as the Mighty Morphin Power Rangers, are among the prospective buyers
who may still have interest.

However,
privately held Classic Media does not have to disclose its finances, and
so it remains unclear whether it has the money to work a deal for Henson.
Saban has been busy fighting to wrest the assets of insolvent German media
group KirchMedia from its agreement with publisher Heinrich Bauer Verlag,
and so may not be focused on the Muppets.

Neither could
be reached for comment.

Ailing EM.TV,
which is buying time on the Henson auction by getting leniency from creditors,
continues to negotiate with other bidders. It also just secured $37 million
from Sesame Workshop by monetizing a debt that was to have been repaid
over eight years.

Fan site Muppet Central created by Phillip Chapman. Updates by Muppet
Central Staff. All Muppets, Bear characters are copyright
of The Muppets Studio. Sesame Street characters are copyright of Sesame
Workshop.
Fraggle Rock, Creature Shop and similar likenesses are copyright
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